2-Star Stocks Poised to Plunge: Nokia? (NOK)

2-Star Stocks Poised to Plunge: Nokia?

Based on the aggregated intelligence of 180,000-plus investors participating in Motley Fool CAPS, the Fool's free investing community, embattled mobile handset specialist Nokia (NYSE: NOK ) has received a distressing two-star ranking.

With that in mind, let's take a closer look at Nokia's business and see what CAPS investors are saying about the stock right now.

Nokia facts

Headquarters (founded)	Espoo, Finland (1865)
Market Cap	$8.2 billion
Industry	Communications equipment
Trailing-12-Month Revenue	$47.5 billion
Management	Chairman/CEO Stephen Elop (since 2010) CFO Timo Ihamuotila (since 2009)
Return on Equity (average, past 3 years)	(3.9%)
Cash/Debt	$13.4 billion / $6.6 billion
Dividend Yield	11.7%
Competitors	Apple Google Ericsson

Sources: S&P Capital IQ and Motley Fool CAPS.

On CAPS, 10% of the 3,174 members who have rated Nokia believe the stock will underperform the S&P 500 going forward.

A few months ago, one of those Fools, dferry01, succinctly summed up the bear case for our community:

The smartphone market runs up big margins by charging a premium for style, image, and brand. ... Even if Nokia can ship a decent number of phones, they're just not going to be able accomplish the same per-unit profits as their cooler competitors. The company will survive and do fine enough, supplying down-market handsets to the emerging world and more economic first-world consumers, but it's not on the same playing field as Apple and isn't going to be.

If Nokia is locked out of the kind of high-margin sales operations that generate big profits, I don't see its bottom-line earnings rising quickly enough to beat the market.

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Fool contributor Brian Pacampara owns no position in any of the companies mentioned. The Fool owns shares of Apple and Google. Motley Fool newsletter services have recommended buying shares of Apple and Google, as well as creating a bull call spread position in Apple. Try any of our Foolish newsletter services free for 30 days.

We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Fool's disclosure policy always gets a perfect score.

Comments from our Foolish Readers

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Report this Comment On June 26, 2012, at 11:00 AM, techy46 wrote:

Competitiors? Not Google and Ericsson. You need to delete them and add HTC and Samsung. So NOK has $6.8 cash net of debt and $7.4b patents whichs is $14.2 assets for 3.7b shares. That gives me a $3.84 PS vs current $2.14 PS. So NOK's selling at a 45% discount with an 80% upside.